Which of these statements apply MM Proposition II without taxes? I. The expected return on equity...

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Question

Which of these statements apply MM Proposition II without taxes? I. The expected return on equity...

Which of these statements apply MM Proposition II without taxes?

I. The expected return on equity is positively related to leverage.

II. The value of a firm cannot be changed by changing its capital structure.

III. Risk to equity holders increases with leverage.

IV. The expected return on equity is affected by the firm's debt-to-equity ratio.

Multiple Choice

II and IV only

I, II, and III only

I, III, and IV only

I and III only

I, II, III, and IV

business finance

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Answer 1

Answer #1

The correct answer is option of I, III, and IV only

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Answer 2

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